Category Archive: 4.) Marc to Market

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FX Weekly Preview: Light Economic Calendar Week Allows New Thinking on Macro

2016-08-07

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2016-08-07

Policy outlook is clear: ECB and BOJ review next month, FOMC still looking for opportunity. Inventory cycle making quarterly US GDP forecasting difficult, but it looks like re-acceleration still the more likely scenario than recessions. Why didn't European bank stress tests results have more impact?

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Weekly Speculative Positions: Record Sterling Shorts, Net Short in Swiss Francs

2016-08-06

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2016-08-06

For a period that included a BOJ and FOMC meeting and the US GDP, speculators in the currency futures were unusually quiet.  Summer holidays with family may be more important. Of the 16 gross currency futures speculative positions we track, 12 of them were less than 5k contracts. There was only one gross position adjustment more than 10k contracts.  Euro bears covered …

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US Jobs Surprise, Canada Disappoints

2016-08-06

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2016-08-06

Underlying concerns about US labor market ease after two robust reports. Sept Fed views will not change much. Canada’s data is disappointing, BOC optimism may be challenged.

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FX Daily, August 05: US Jobs Data on Tap, but Don’t Expect Miracles

2016-08-05

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2016-08-05

The focus is squarely on the US employment data today, ahead of which the capital markets are mostly consolidating yesterday's Bank of England inspired moved. The Australian and New Zealand dollars, alongside sterling, which is up about half a cent after losing two yesterday.

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FX Daily, August 04: The BOE Owns Today, but Tomorrow is a Different Story

2016-08-05

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2016-08-05

The Swiss Franc appreciated today against the euro. Given that the Bank of England started monetary easing, this slight appreciation is unexpectedly weak - reason was probably intervention. The SNB intervention level should be around 1 billion francs. Numbers revealed in next week's sight deposits.

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Carney Gets Ahead of Market Expectations; Sterling Slumps, Gilts Soar

2016-08-04

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2016-08-04

BOE cuts rates and expands QE. Door is open to more easing. Sterling stabilizes after selling off 2 cents.

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FX Daily, August 03: Consolidation Featured

2016-08-03

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2016-08-03

The US dollar is consolidating yesterday's losses. The greenback's upticks have thus far been shallow and unimpressive, except perhaps against the New Zealand dollar, which is off 0.8% ahead of next week's RBNZ meeting. Softer than expected labor cost increase reinforces the conviction that a 25 bp rate cut will be delivered next week.

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Gorilla or Elephant, Chinese Surplus Capacity is the Challenge

2016-08-03

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2016-08-03

China's excess capacity is one of the most formidable challenges the China and the world face. Unexpectedly, China's steel industry reported a profit in H1 16. M&A for industry rationalization and foreign markets seem to be the main ways China is trying to address the excess capacity.

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FX Daily, August 02: Greenback Slides Despite RBA Rate Cut and 7-year Low in UK Construction PMI

2016-08-03

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2016-08-03

The US dollar is offered against the major currencies, but appreciating against many emerging market currencies, include the South African rand and Turkish lira. Oil prices are trying to stabilize with Brent near $42 and WTI near $40, but the recent losses continue to weigh on the Malaysian ringgit and the Mexican peso.

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Abe’s Fiscal Policy: More of the Same

2016-08-02

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2016-08-02

Japan's fiscal stimulus if smaller than it appear and is unlikely to boost the economy as much as officials may think. The problem in Japan is not that interest rates are too high or that pubic investment is too weak. The risk is that the yen strengthens further, and we suggest the dollar may fall toward JPY94.60.

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FX Daily, August 01: Dog Days of August Begin

2016-08-01

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2016-08-01

The US dollar is trading with a small upside bias in narrow trading ranges. The main news has consisted of PMI reports, while investors continue to digest last week's developments. In particular the BOJ's underwhelming response to poor economic data and a missed opportunity to reinforce the fiscal stimulus, and the dismal US GDP.

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Great Graphic: Real Broad Trade-Weighted Dollar

2016-08-01

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2016-08-01

The real broad trade-weighted dollar index rose in July for the third month. It peaked in January above trendline drawn through the Reagan and Clinton dollar rallies. Expect the trendline to be violated again before the end of the year.

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No Big Thoughts, but Several Smaller Observations

2016-08-01

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2016-08-01

Notable that as the CRB Index moves lower, MSCI emerging market equities have done well. European banks are retreating after the stress test results. Tokyo elected its first women governor as this seem to be in part a sign of protest against Abe.

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FX Weekly Preview: After this Week, Does August Matter?

2016-07-31

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2016-07-31

RBA meeting is a close call. BOE meeting consensus on rate cut, maybe new QE and lending-for-funding. More details of Japan's fiscal policy. U.S. jobs data. After this week, and outside of RBNZ rate cut, August may be uneventful.

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Weekly Speculative Postions: Speculators Sell European Currency Futures

2016-07-30

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2016-07-30

The euro bears added another 10.3k contracts to their gross short position, which brought it to 221.8k contracts., This is this is the largest grossshort position since early January.

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Great Graphic: Relative Performance of Bank Stocks–US, Europe, and Japan

2016-07-29

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2016-07-29

MSCI US Bank Index, MSCI European Bank Index and the Japan Topix Bank Index compared. Divergence in the health of the financial sector.

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FX Daily, July 29: Kuroda Hesitates, Yen Advances, Focus Turns to Europe and North America

2016-07-29

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2016-07-29

Main events: Far Lower GDP Growth due to higher inflation and bigger trade deficit. Yen and Swissie advance and weaker dollar. Swiss economy remains on track based on the KOF economic barometer.

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FX Daily, July 28: Dollar Pulls Back Further Post-FOMC

2016-07-28

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2016-07-28

After reversing lower yesterday after the FOMC statement, the US dollar has continued to move lower against the major currencies, save sterling. While the market is not fully confident of a rate cut by the Reserve Bank of Australia, indicative pricing in the derivative markets suggest a UK rate cut has been fully discounted (and a new asset purchase plan may also be announced).

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Fasten Your Seat Belts: Tomorrow Promises to be Tumultuous

2016-07-28

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2016-07-28

Japan reports on labor, consumption, inflation and industrial output before the BOJ meeting. ECB reports inflation and Q2 GDP and the results of the stress test on banks. US reports first look at Q2 GDP.

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FOMC says What it Had To, No More or Less

2016-07-27

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2016-07-27

Fed upgraded its assessment of the economy. Added that the downside risks to the economy have diminished. Only George dissents.

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